Business: Sterling Bank grows half-year profit by 97%

Sterling Bank Plc has recorded a growth in its profit after tax of 97 percent  for the  2013 first half result released last week, just as it expressed confidence in its ongoing rights issue.


The first-half report came on the heels of initial filings showing extensive shareholders’ interests in the bank’s ongoing N12.5 billion rights issue. Sterling Bank is raising N12.5 billion through a rights issue of about 5.889 billion ordinary shares of 50 kobo each at N2.12 per share.

Sterling Bank had traded at a high of N3.05 at the stock market. The shares have been pre-allotted on the basis of three new ordinary shares of 50 kobo each for every eight ordinary shares of 50 kobo each held as at May 20, 2013. Application list, which opened on June 24, 2013, will run till July 31, 2013.

A breakdown of  the bank’s nterim report and accounts  for the six-month period ended June 30, 2013 showed that earnings per share doubled to 38 kobo in 2013 as against 19 kobo in comparable period of 2012, underlining the increasing attraction of the bank as a high-yield stock. Investors responded positively to the earnings report as the bank’s share price rose by 0.38 per cent yesterday to N2.67. This implies double-digit six-month earnings yield of 14.2 per cent.

The report showed that profit before tax rose by 93.5 per cent to N6.27 billion as against N3.24 billion recorded in corresponding period of 2012. Profit after tax nearly doubled from N3.01 billion to N5.92 billion, representing an increase of 96.7 per cent.

The bottom-line performance was driven by the bank’s growing brand acceptability and customers’ deposit as well as efficient cost and risks management. Gross earnings rose by 28 per cent from N32.68 billion to N41.86 billion.

While interest income grew by 18 per cent from N26.34 billion to N31.08 billion, net interest income grew faster by 27 per cent to N15.17 billion in 2013 as against N11.96 billion in comparable period of 2012.

Key balance sheet items also underscored the continuing fundamental strength of the bank. Total deposits rose by 21 per cent from N466.85 billion recorded as at December 31, 2012, which was the opening figure for this year, to N564.93 billion by June 2013. Within the same period, total assets grew by 19 per cent to N690.84 billion compared with N580.23 billion while shareholders’ funds increased from N46.64 billion to N49 billion.

While loans and advances increased by 19 per cent from N229.42 billion to N272.75 billion, the proportion of non-performing loans to gross loans and advances remained checkmated at 2.7 per cent during  the period, far better than industry’s benchmark of 5.0 per cent.